US tech companies may face restrictions in China but they are doing battle to seize those parts of the market that they can.
Google announced Monday that it will invest $550 million in Chinese e-commerce powerhouse JD.com as part of the US Internet giant’s efforts to expand its presence in fast-growing Asian markets.
The two companies described the investment as one piece of a broader partnership that will include the promotion of JD.com products on Google’s shopping service, which in turn could help JD.com expand beyond its base in China and Southeast Asia.
“Given Walmart also has a close relationship with JD, I see (this) as further tightening of the Google/Walmart alliance, which seems focused on building a third force in ecommerce beyond Amazon and Alibaba,” Atlantic Equities analyst James Cordwell told Reuters.
Company officials said the agreement would not involve any major new Google initiatives in China, where the company’s main services are blocked over its refusal to censor search results in line with local laws.
The US-China Tech Race
Google is stepping up its investments across Asia, where a rapidly growing middle class and a lack of infrastructure in retail, finance and other areas have made it a battleground for US and Chinese Internet giants.
Silicon Valley CEOs have invested heavily in China as both a manufacturing site and a market. They have been gambling on the hope that political risks would decline as reforms reduced the state sector’s role, loosened regulations, and made China’s market more like the US. Yet given recent internal political developments, this may be unlikely to happen.
At the same time, Chinese tech companies have come into conflict with the US government which has ordered investigations into allegedly hostile takeovers of US firms such as in an attempt by Singapore-based Broadcom to buy US chip stalwart Qualcomm in March, citing national security concerns.
China’s tech companies are increasingly leading the country’s economic momentum internationally. Collectively known as BAT—signifying the search engine firm Baidu, the e-commerce giant Alibaba and the social messaging company Tencent—the biggest of these are frequently compared with Google, Amazon and Facebook.
China, under President Xi Jinping, has launched an ambitious plan to dominate mobile technology, supercomputers, AI and other cutting-edge industries, putting huge resources behind an effort that it considers crucial to the country’s future.
The US-China tech race continues, and it is likely to be the definitive tech battle of the 21st century.